Hong Kong stocks concept tracking | The construction materials industry has a low external dependence. Institutions are optimistic about the value of the cement sector. (Attached with concept stocks)

The building materials industry, as a field highly associated with real estate, has faced downward pressure on income and profits since 2021. The industry has also seen optimization in terms of clearance and competition. Currently, institutions predict a narrowing of the decline in demand, with the second derivative turning positive. Along with the policy direction of "anti-involution," some sub-industries have seen price increases and improvements in operating profits, exceeding market expectations. The industry's value allocation has become apparent. In terms of allocation pace, CITIC SEC believes that sectors with less demand pressure and better existing competitive structures will be the first to see allocation opportunities. The recommended order is fiberglass, cement, and consumer building materials. Guosen points out that against the backdrop of tariff impact, China is expected to introduce more proactive policies to expand domestic demand to offset the decline in external demand. This includes issuing special national bonds to support major strategic engineering construction, accelerating the process of local government bond issuance, and increasing funding support for areas such as urban village transformation and reclaimed idle land. The building materials industry, due to its low reliance on external demand, is expected to directly benefit from the expansion of domestic demand policies. Soochow points out that if external demand rapidly declines, infrastructure construction in central and western China is likely to become an urgent direction. Guotai Haitong points out that from the perspective of the industry chain's balance sheet, it is highly certain that the pressure on the decrease in cement demand will slow down in the year. From the observation on the front line of the industry, "originally under construction" key projects have contributed significantly to the potential of domestic demand hedging. The hedging activities in major economic provinces such as Guangdong may have already started. Observing the overall cement industry in the country, the April peak-demand plan and the steady pricing situation have progressed smoothly. The bank points out that the resilience and stability of demand in the cement industry have been tested, and the industry has the opportunity to improve its structure and realize profits due to coal price concessions. The improvement in profitability in the first quarter of 2025 is anticipated. Hong Kong stocks related to cement infrastructure: Huaxin Cement (06655), Anhui Conch Cement (00914), CR BLDG MAT TEC (01313), WESTCHINACEMENT (02233), CNBM (03323)